Asia Adopting Host Card Emulation, Thailand To Lead

Host card emulation (HCE) is growing rapidly in Asia. Previously, we have seen all the major HCE pilot projects and implementation happening in the Americas, Europe and Australia. A cloud-based mobile payments platform is being built in Thailand in collaboration with three technology firms; this will help Thai people process credit card payments through their smartphones.

SimplyTapp one of the major technology providers of HCE solutions in the world, SET-listed MFEC Plc and Japan's TIS Inc. have jointly developed an NFC-based mobile payment service called the Asian Payment Cloud Project.

Doug Yeager, chief executive of SimplyTapp Inc is optimistic about the opportunities of HCE in Asia. In an interview with Bangkok Post, Mr. Yeager said, “Thailand is the first country in Asia-Pacific we selected to launch the Android-based mobile payment service. The next country to focus is Japan.”

Thailand has 10,000 NFC-enabled point-of-service terminals. NFC-ready mobile handsets account for 20-25% of total Android-based smartphones. Similarly, in Japan, there are more than one million NFC-enabled POS and more than 70 million NFC-enabled devices.

Siam Commercial Bank, the first commercial bank in Thailand, is the first company to buy HCE solutions from SimplyTapp. The company is planning to rollout its pilot service by the end of this year which is targeted at 1,000 customers. Thailand has a large young population who use smartphones, so there is a strong potential for mobile payments in the country. Asia-Pacific is a fast-growing region in terms of HCE, and people are eager to adopt new mobile technologies.

Last month, ICBC announced the launch of the HCE cloud payment credit card with China UnionPay and VISA, the first commercial bank to do so in Asia.

Mobile payments are growing rapidly in the Americas and Europe. The same trend is expected to replicate in Asia’s case. It is expected that HCE will play an integral role in global mobile payments. HCE-based wallets have the potential to revolutionize NFC banking; it also poses a threat to plastic cards across all regions. The technology has the potential to eliminate the dependency on mobile operators as the technology gives the control back to the card issuers. Currently, NFC mobile payment requires users have to change their SIM card, which causes inconvenience to users and also erodes the adoption of mobile payment services. HCE places card data in the cloud which can be used by the customer easily at any place which accepts NFC-based payments. Thus, HCE removes the hassle of changing the SIM card to NFC and also makes the whole payment process seamless.

The biggest development in HCE happened last year when Visa and MasterCard showed their support for HCE technology. Other than SimplyTapp, there are major players like Bell ID, Oberthur Technologies, Giesecke & Devrient and Sequent who are developing HCE solutions for financial companies. Currently, there are less than 30 financial institutions that have tested or implemented HCE solutions.

A research report by GrowthPraxis predicts that the total addressable market for HCE is expected to reach 530 billion by 2020. HCE is only possible in Android devices that have KitKat or versions above. With Google poised to launch Android Pay at the upcoming Google I/O conference, HCE can get a boost in adoption as HCE itself is a core technology offering by Google and can certainly be expected to be included in the anticipated Android Pay solution. More than 30% of all smartphones running Android OS are already on KitKat. What’s more, as most OEMs and MNOs roll out phones with the updated operating system, KitKat OS penetration will be even higher among the new smartphones being shipped. Google has been very committed to bringing OEMs onto the new platform, so eventually all new Android OS smartphones could have HCE support. When that happens, 85% of all smartphones shipped (out of the global Android market share) would support HCE. With the rapid increase in HCE-based devices in the market, GrowthPraxis estimate that the total number of HCE technology users globally would reach around 470 million by 2020.

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